Don't have Aadhaar? You Can't Register Your Startup

Aspirants can't even `fill' new online form launched last month for registering new cos unless promoters' Aadhaar credentials are validated online

Even though the Su preme Court has only allowed Aadhar to be used `voluntarily for a few social welfare schemes the Modi government has made it compulsory for any budding en trepreneur to submit her or his Aadhaar number in order to reg ister a new business.

In fact, aspiring startups can't even `fill' a new online form for registering new enterprises intro duced last month unless the Aad haar credentials of their promo ters (sought in the first column of the form) are validated online The ministry for micro, small and medium enterprises had last month notified Udyog Aadhaar taking a cue from the prime minis ter's radio show Mann Ki Baat where he had talked about simpli fying procedures to start a busi ness with a single-page registra tion form. Experts said this move is a violation of the Supreme Court order on Aadhaar. “The Supreme Court has been crystal clear on the Aadhaar number being voluntary for now,“ said Supreme Court lawyer Pavan Duggal. “So this would be a violation of the apex court's order and could be a fit case for contempt of court. This would also in ringe on citizens' right to equali y, as it would discriminate against people who don't have Aadhaar numbers yet.“

Detailed queries sent to the gov rnment on Friday elicited no re ponse till the time of going to press. Dhiraj Mathur, partner (tax and regulatory) at PwC said Aadhaar is essential to check leakages in subsidies and benefits paid out of taxpayer money , but it would not be correct to make it mandatory for starting a business unless the unique identification programme has not achieved full `coverage' or enrolments. Industry representatives didn't want to comment on the matter, though they said they will take it up for in ternal discussions.

Some state governments had already voiced apprehensions about the need to ask only for entrepreneur's Aadhar number rather than other identification proofs in order to register their businesses. “In our state, Aadhar enrolment has only begun in three districts. We had advised the central government to consider allowing PAN cards or other identity documents as well,“ MV Ahmed, additional director of industries and commerce in the Assam government, told ET.

“But with Aadhaar linkage being mandatory in the form, we will not be able to submit any applications from our state,“ he said.Though investors can set up units using the state's own portal for registering investments under ` . 10 crore, Ahmed said the data cannot be shared with the Centre owing to this `technical fault'. “That the MSME ministry maintains this website makes a mockery of all the orders issued by the Supreme Court,“ said Reetika Khera, associate professor (economics) at the Indian Institute of Technology , Delhi. “In fact, the SC order in early 2015 asked the government to modify its forms in order to be compliant with its orders and in August directed it to advertise the voluntary aspect of Aadhaar. The most recent order on 15 October said voluntary use is allowed for PDS, NREGA, National Social Assistance programme and EPFO,“ she pointed out.

“A large chunk of enterprises in India are simply not registered due to the cumbersome paperwork involved in the process and, therefore, can't tap the government schemes for them. The KV Kamath panel on financing the MSME sector, that has been the biggest job creator in recent years, had recommended that the registration should be universalized,“ said an official on the rationale be hind the new one-page form.

The Economic Times, New Delhi, 20th Oct. 2015

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